Bank debt owed by Scottish farmers hits 'record' £2.2bn

The figures compiled by Scotland's Chief Statistician show levels of bank debt are the highest recorded since records began in 1972 in addition to an estimated £1.4bn in liabilities relating to hire purchases, lease arrangements and money borrowed from family members and other sources

Bank debt held by Scottish farmers rose to a 'record' £2.2 billion in the year to May, figures from Scotland's Chief Statistician show.

Bank debt rose £177 million on the prior year, and the latest figures make it a seventh straight year debt levels have increased.

The levels of bank debt are the highest recorded since records began in 1972, and debt levels, when adjusted for inflation, are up eight per cent on the prior year.

In addition, farms have an estimated £1.4 billion of liabilities relating to hire purchases, lease arrangements and money borrowed from family members and other sources.

The Scottish Government said the data “reflect the overall UK picture”, citing figures from the Bank of England which show debt levels across the UK “agricultural, hunting and forestry” sector has risen by 51 per cent since 2010 to £17.7 billion as of May 2016.

The latest debt figures follow the botched launch of a new IT system to manage European Common Agricultural Policy (CAP) subsidies, which saw thousands of farmers paid late.

Public spending watchdogs Audit Scotland warned in May the Scottish Government could face fines of between £40 million and £125 million as a result of the “catastrophic” reform of farmers’ payments.

The CAP scheme replaced the Single Farm Payment Scheme with the new Basic Payment Scheme last year.

The grant money, which is paid as a supplement to main business income, is allocated by the Scottish Government.

As of August 24, 1,061 of 18,479 eligible businesses had still not received payments under the CAP scheme.

The Scottish Government said the complexities of the new CAP system, being delivered by a new IT system, had hindered the payment process.

The farm debt figures were released alongside the latest round of funding to help create and support new farming businesses.

The Scottish Government said the latest funding round will see 35 businesses share more than £1.8 million, and will take the total spend on the Young Farmers and New Entrants Start-up Schemes to more than £7 million.

To date the scheme has supported 140 farms across the country.

Liberal Democrat rural affairs spokesman, Mike Rumbles, said: “It is no surprise that farmers have been forced to increase borrowing.

“The shambles over Common Agricultural Policy payments mean it would have been a surprise if debt had not spiked.

“Thousands of farmers were forced to wait months to receive the money they were due. The bills did not stop arriving during this period.

“Hundreds of farmers are even now yet to receive their farm payments and there are huge concerns within the sector over what will happen next year, too.”